Manufacturing sector expands at slowest pace in almost two years

Canada’s manufacturing sector expanded in October at the slowest pace in nearly two years as production and new business growth lost further momentum, while input costs and factory gate prices climbed at a faster clip, data showed on Thursday.

The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, fell to a seasonally adjusted 53.9 last month, its lowest since January 2017, from 54.8 in September.

A reading above 50 shows growth in the sector. It was the fourth straight month of decline for the index after it peaked in June at 57.1.

“October data suggest that manufacturing production growth continued to ease from the elevated rates seen over the summer,” Christian Buhagiar, president and CEO, Supply Chain Management Association (SCMA), told Reuters. “More subdued demand in both domestic and export markets contributed to the weakest rise in new order volumes since November 2016.”

The new orders index declined to 52.2 from 53.8 in September, while the output index fell to 53.0, a 22-month low, from 53.9.

Employment remained a bright spot, which manufacturers linked to rising business investment in plant capacity and new product launches, IHS Markit said. Still, the employment index dipped to 55.3 from 55.6 in September.

Steel tariffs and higher transportation costs were blamed by manufacturers for an increase in their costs, IHS Markit told Reuters.

The input price index edged up to 66.1 from 65.9, while output prices rose to 59.1 from 58.9.